Most debts are eliminated, or 'discharged', through a Chapter 7 Bankruptcy. However, there are some types of debts that cannot be discharged through bankruptcy. These debts are described as 'non-dischargeable', which means that after you file bankruptcy, and your case is over, you will still owe these debts.
1. Student Loans and Educational Based Debt: Loans for 'educational benefits' cannot be discharged through a bankruptcy, unless you can show that they cause you an 'undue hardship.' This includes loans for tuition, books, room, board, etc. (11 U.S.C. 523(a)(3)), it DOES NOT include simple unpaid tuition or fees. Unfortunately, the definition of 'undue hardship' is insurmountable so that student loans should be considered 'non-dischargeable'.
2. Child Support and Alimony: Child support and alimony cannot be discharged through the filing of a bankruptcy. (11 U.S.C. 523(a)(5)). It is, however, possible to obtain to catch up aid child support or alimony through a chapter 13 filing.
3. Taxes: Taxes will not be discharged by filing a Chapter 7 Bankruptcy unless: (1) they are income taxes (or taxes measured by gross receipts); (2) they are over three years old; (3) they were filed on time (meaning before April 15th of that tax year, unless an extension was given); and (4) they must be accurate (this means that the IRS did not later find errors or omissions in the return).
You can still discharge some tax debts if you filed your returns late, but more than 2 years prior to the bankruptcy, if all the other elements described above are met (11 U.S.C. 523(a)(1)).
4. Marital/Divorce Debts: Any debt that was incurred through a divorce decree 'to a spouse' will not be dischargeable through a Chapter 7. There is currently great disagreement as what exactly “to a spouse” means. Generally, any debt awarded through a divorce decree can no longer be discharged in bankruptcy, regardless of whether the ex-spouse objects to the bankruptcy or not. (11 U.S.C. 523 (a)(15)).
5. Court Imposed Restitution: Any money owed to the Court or victim of a crime is not dischargeable. (11 U.S.C. 523(a)(7) and 11 U.S.C. 3613).
6. Court Fees: Debts owed to a court are also not dischargeable in a Chapter 7 Bankruptcy. (11 U.S.C. 523(a)(17)).
7. Fraud/Theft: Debts incurred in the commission of a fraudulent act will not be discharged if the creditor objects and files the appropriate claim. This includes debts incurred through larceny and embezzlement, but also includes credit card debts based upon a false credit application. (11 U.S.C. 523 (a)(2) & (4)).
8. Eve of Bankruptcy Credit Card Debt: If you buy luxury goods on a credit card within 90 days of filing a bankruptcy of more than $550, or cash advances of $825 within 70 days of filing a bankruptcy, the Judge may presume that you did not intend to repay the debt when you incurred it because you expected to file bankruptcy and those debts will be deemed non-dischargeable.
9. Intentional Torts: Debts arising from intentional acts to injure a person or their property, or resulting from drunk driving accidents are not dischargeable. (11 U.S.C. 523 (a)(6)). These acts include battery and assault.
10. Debts Not Previously Discharged in Other Bankruptcies: Debts that were included in a previous bankruptcy that was dismissed due to fraud. (11 U.S.C. 523 (a)(9) & (10)).
CONCLUSION
These are the major categories of debts that are 'non-dischargeable' in bankruptcy. If you are in debt and would like to find out what your legal options are, please give us a call at 757-627-8365.
W. Greer McCreedy II
Reliable Debt Solutions Norfolk, Bankruptcy Lawyers Virginia Beach, VA
wmccreedy@kpct.com
Born in King of Prussia, Pennsylvania on September 23, 1960, W. Greer McCreedy II has been practicing law in Virginia for over 20 years. Mr. McCreedy graduated with a Bachelor of Arts (BA) degree from Old Dominion University, Norfolk, Virginia, in 1982. He earned his Juris Doctorate (J.D.) degree from Marshall-Wythe School of Law, College of William & Mary in Williamsburg, Virginia in 1987.
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